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The Difficult Balance Between Comparative Advertising and Trademark Protection

Have you ever compared products or services when contemplating a purchase? Companies, whenever they can, also strive to mark themselves out from their competitors to gain a competitive advantage and new clients. In an internal market where competition is highly encouraged by the European Union, comparative advertising has been strongly promoted and praised.

Comparative advertising inherently implies that both a competitor and its trademarks are being referred to in an advertisement. Since this ordinarily would constitute trademark infringement, the Advertising Directive (Directive (EC)2006/114) established conditions under which such comparative advertising is permitted. This is of course a difficult balance, and was only provided for by the Advertising Directive, until the recent adoption of Regulation (EU) 2015/2424, and Directive (EU) 2015/2436 (the Trademark Package). Comparative advertising has been held up as an exception to trademark law, yet it has always been strictly circumscribed by reference to trademark law.

The Advertising Directive provides, in article 4, that an advertisement must comply with the following rules:

“[…] d. It does not discredit or denigrate the trademarks, […]

[…] f. It does not take unfair advantage of the reputation of a trade mark

g. It does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark […] and

h. It does not create confusion among traders, between the advertiser and a competitor or between the advertiser’s trademarks, goods, services etc. and those of a competitor”.

The European Court of Justice established an interpretation principle that the conditions of the validity of comparative advertising needed to be interpreted in the most favorable way so as to allow such advertising.

The ECJ also ruled in favor of an extension of the notion of comparative advertising itself and included advertising or communications which do not even show any comparison element. For instance, it held that “as regards the “comparative” nature of advertising within the meaning of [the directive] the test is that comparative advertising identifies, explicitly or by implication, a competitor or goods or services offered by a competitor”. The “identification criteria” could seem far from the comparison nature that one could search in a comparative advertising.

Comparative advertising could include new comparison methods, such as web comparators, reference to adaptability of spare parts of branded products, or even concordance tables. With this extensive definition, one may also consider that advertising incurring no comparison but giving information on competitors’ products or services, readily identifiable, falls within the scope of comparative advertising, and escapes from trademark law provisions regarding infringement, which supposed the reproduction and use of the competitor’s trademarks.

In order to address the concerns that trademark owners may have, the EU judges extended the functions of trademark, beyond the traditional guarantee of origin, in order to allow trademark owners to prohibit the use of their trademark by third parties, not only in cases where the public could legitimately believe that the trademarks compared are coming from the same companies or economically linked undertakings, but also in cases where the public would not legitimately believe that the goods compared have the same origin or are economically linked undertakings, but where such use would be detrimental to the other trademark functions, such as communication, investment and advertising.

Although the scope of these additional functions are still unclear at this time, it resulted from this case law that trademarks owners were entitled to forbid any comparative advertising that might affect any of those trademark functions in filing trademark infringement claims, in addition to bringing a claim for non-compliance with the requirements set forth by the Advertising Directive.

In the meantime, the ECJ also realized that an overly extensive interpretation of comparative advertising could be dangerous and came back to a definition more in accordance with the real purpose of comparative advertising.

Many considered that the abovementioned case law and applicable rules were sufficient to reconcile trademarks and comparative advertising, so that no new provision was needed.

However, the Trademark Package fills a gap in protection by setting out a new ground of action for trademark owners. It clearly states that a trademark owner can launch an action for trademark infringement against any person who “uses a trademark in comparative advertising in a way that does not comply with the Advertising Directive” and it then aligns both sets of rules.

Time will tell if this additional prohibition improves the protection granted to trademark owners over comparative advertising and leads to a more relevant case law, with more refined definitions of what is authorized and what is not.

Compare jurisdictions: Arbitration

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